Tata Realty, StanChart PE JV buys M3M land for Rs 250 crore

BENGALURU: A joint venture between Tata Realty and Infrastructure (TRIL), a subsidiary of Tata Sons, and Standard Chartered Private Equity has bought the commercial assets of Gurgaon-based builder M3M in a deal valued at 250 crore.

"The JV bought 25 acre from M3M for 10 crore per acre. The deal was closed in the first quarter," said two people aware of the deal. The Tata group company has been exploring various investment options across Mumbai and National Capital Region.

TRIL and M3M did not respond to email queries sent by ET.

M3M recently raised 1,250 crore from Indiabulls Housing Finance for a residential project. The builder will use part of the capital to pay the final instalment to Sahara group for concluding a deal to buy 185 acres in Gurgaon.

TRIL entered into a partnership with Standard Chartered recently and has plans to build commercial office projects through a real estate investment trust (REIT). While Standard Chartered has committed about 800 crore, TRIL will invest 1, 800 crore in the joint venture and will have 70% stake in the project.

With removal of dividend distribution tax through a proposal in Union Budget 2016-17, REITs were expected to become a reality in India. The move was expected to offer commercial developers a liquidity option and retail investors an opportunity to participate in office realty market's growth. However, the capital market regulator Securities & Exchange Board of India has not received any application for listing of REITs so far. Some of the realty developers eyeing REIT listings are RMZ Corp and Qatar Investment Authority, Embassy Group and Blackstone and K Raheja Corp.

"The intent to allow REITs to invest more into under-construction assets may dilute the idea of a REIT. Globally, REITs are composed of only stable assets. Allowing more investment in incomplete projects may improve return on investment but on flip-side it will also increase risks," said Bhairav Dalal, Partner - Tax, PwC India:

REIT is an entity that uses pooled capital of investors to buy, hold and manage income-producing properties. Developers with REIT-able office properties are optimistic that few more changes will take place soon and they will be able to list their portfolios.

The TRIL-Standard Chartered JV is also looking at Bengaluru, Pune and Hyderabad for investment opportunities and plans to deploy the capital over the next two years. Tata is also one of the bidders for a 30-acre industrial land along the Thane-Belapur Road near Mumbai.

Indian commercial real estate offers investment opportunity worth $43-$54 billion across the top 8 cities including Mumbai, Delhi-National Capital Region, Bengaluru and Pune through REIT-eligible ready stocks, showed a report by RICS and Cushman & Wakefield. The report estimates that around 315 million sq ft of office inventory is eligible for REIT across the cities. The REIT-eligible inventory includes existing non-strata sold Grade A inventory, wherein Bengaluru, Mumbai and Delhi-NCR cumulatively account for 67%.